2022 U.S. Mortgage Outlook
2021 was a very unique year for the mortgage lending industry. The COVID-19 pandemic was a recurring challenge to overcome throughout the year, and helping our customers navigate the homebuying world was more critical than ever before. With the information and projections we know today, we would like to take this moment to forecast what the U.S. mortgage lending and homebuying trends may look like in 2022.
The previous 12 months represented a difficult time for homebuyers and sellers, and we will likely continue to face similar challenges in 2022, including supply and demand of properties and materials. As we approach the next big homebuying season, there continues to be an imbalance between homebuyers and the amount of properties available for sale.
These challenges also put a damper on new construction – not only are inventory and materials in short supply because of delivery, but also because they’re much more expensive. In summation, the supply chain is being whipsawed and needs to catch up.
Increased Conforming Loan Limits
The Federal Housing Finance Agency (FHFA) has raised the conforming loan limit by 18% to a maximum amount of $647,200 for 2022. In certain high cost areas, it’s even more. This means homebuyers will have more flexibility (and possibly lower rates) when financing a higher priced home in 2022.
Ross Mortgage has created a customized conforming loan limits look-up tool to help you navigate these new changes. Check out the tool here and see what rates are available to you.
Elevated, Yet Affordable Interest Rates
The Federal Reserve is the arbiter of the future of interest rates, and they are currently determining when they’re going to stop buying mortgage bonds to keep interest rates at an effective level of 0. Ultimately, they will slow their buying down, which will cause interest rates to have some increase in 2022.
Next year, we expect to see slightly elevated rates. Although they will continue to stay at historic lows, this increase will impact affordability and peoples’ ability to qualify for housing.
The Rise of Millennial Homebuyers
Millennial homebuyers have now reached the prime homebuying age and altogether form a group larger than Baby Boomer homebuyers. With such a large group, the increase in demand bodes well for the housing, real estate and finance industries. From a pure supply and demand point of view, the rise of the millennial homebuyer showcases that housing prices will likely stay strong.
What ultimately affects the ability of millennial homebuyers to purchase a home is the overarching issue of wages not keeping pace with house appreciation. If you combine slower wage growth with slightly higher interest rates, then the ability to qualify for higher prices is diminished.
The Need for Homebuyers to Differentiate Themselves
Homebuyers in 2021 found themselves in the midst of the most competitive housing market in history. As champions for prospective homeowners, our team spent months trying to solve how the average homebuyer can stand out in today’s market.
And we did—by introducing the Guaranteed Pre-Approval from Ross Mortgage. A Guaranteed Pre-Approval turns your home bid into a cash offer, enabling sellers to accept with confidence knowing it’s as strong as, or superior to, any other offer they receive.
Getting a Guaranteed Pre-Approval in 2022 is as easy as applying for any other loan application. Just get in touch with a Ross Mortgage loan officer to start the process, or visit our Guaranteed Pre-Approval page to learn more.
Whether you are a first-time or returning customer, you can rest assured that our team will be here to assist you every step of the way in 2022.